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Monday, 14 June 2010

City Firms ask for Middle Way to Ease Deficit Burden

By Ben Aulakh

Businesses in London are asking the government to strike a delicate balance between cutting the UK’s deficit and avoiding measures which could jeopardise the city’s competitiveness.

The request comes ahead of the Coalition’s planned emergency budget, set to be announced by Chancellor George Osborne next week.

Firms across the city are asking for key infrastructure projects – such as the tube upgrade Crossrail – to go ahead as planned.

They are also seeking restraint in tax rises that could unduly hamper enterprise from the Conservative/Liberal Democrat government.

Colin Stanbridge, Chief Executive of the London Chamber of Commerce and Industry – LCCI – said, “The business community backs government moves to cut the nation’s public deficit.

“We accept that some tax rises may be unavoidable in the coming months, however we need the government to recognise that hitting businesses hard will actually be counterproductive, reducing revenues rather than boosting them.”

The most pressing concerns outlined by companies ahead of the budget include tackling the UK’s public deficit and ensuring that Crossrail goes ahead, alongside the likelihood of changes to the tax system, and the possibility of a new banking levy.

Mr Stanbridge added, “It is essential that Crossrail is not subject to cost cutting measures that would leave the tube system creaking under the weight of increasing passenger numbers in years to come.”

The LCCI are also concerned about how the proposed tax on banks could disproportionately harm London, placing it at a competitive disadvantage to international rivals.

The chamber say that businesses are more or less resigned to a VAT rise, however they are hopeful the rise will be small and happen in one fell swoop ensuring that administrative costs are minimised.

Companies in the capital are also hoping there will be proper consultation on proposals to make the tax system “simpler”, to ensure the benefits of rate cuts and simplification outweigh the cost of making the changes.